Telstra takes NBN Co to court

Mediation has failed in a dispute over the telco's deal with NBN Co, Telstra says

An attempt at mediation with the National Broadband Network wholesaler over when consumer price index (CPI) adjustments should apply to NBN Co's landmark deal with Telstra has failed according to the telco. As a result, Telstra is taking NBN Co to the NSW Supreme Court next month.

The dispute relates to when CPI changes in should kick in for the deal NBN Co signed with Telstra to gain access to the telco's infrastructure. Telstra wants the deal to be dated from when the two organisations initially struck the agreement in 2011.

The telco's deal with NBN Co received overwhelming support from shareholders in 2011, with 99 per cent voting in favour. However, the deal was finalised in March 2012.

"We have one take on the contract and NBN Co has another," a Telstra spokesperson said.

"We have not been able to reach agreement through a long mediation process so, as provided for in the contract and as the next step, Telstra is asking the court to decide."

The $11 billion agreement was struck between Telstra and NBN Co after years of negotiations. Telstra agreed to migrate its customers to the NBN and decommission its copper network, as well as allow NBN Co access to its pits, pipes and ducts.

The impact of when CPI adjustments should apply is "significant, but not material from a market perspective," the spokesperson for the telco said.

The case is due to be heard by Justice D Hammerschlag on 8 November.

Telstra says that the timing of court action has nothing to do with possible renegotiation of the deal with NBN Co, "although resolving this disagreement will help provide greater certainty and as such may assist future policy discussions."

The election of the Coalition government has made it likely that NBN Co will cease to roll out a network based primarily on fibre-to-the-premises. Instead, the NBN rollout in brownfield sites is likely to be based at least in part on fibre-to-the-node, which relies on copper for the 'last mile' of connectivity.

This would mean a renegotiation of the agreement with Telstra to gain access to the telco's copper network. Communications minister Malcolm Turnbull has previous said such renegotiation could be achieved "speedily".

In its election policy, the Coalition said that 71 per cent of Australians would receive FTTN connections. However, Turnbull has said the precise mix of technologies for the NBN rollout will depend on the outcome of a strategic review NBN Co is currently undertaking.

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